Is There Still Upside in Monolithic Power After Expansion Plans and an 80% Surge in 2025?

If you have been watching Monolithic Power Systems, you know this stock has been grabbing attention with its eye-popping run lately. Deciding what to do now, after such impressive gains, is not a simple call. The stock is up 4.3% just in the last week, and over the past 30 days, it has climbed an incredible 17.1%. Year to date, it has soared 80.2%. Looking at the past three or five years, the gains streak reaches 232.7% and 248.4% respectively. That kind of momentum naturally gets investors wondering if there is more room to run or if things have gotten a bit ahead of themselves.

Underlying these strong moves have been news of Monolithic Power’s expansion plans and new product launches in efficient power solutions, which are addressing market needs in electric vehicles, data centers, and industrial automation. This forward-thinking approach has injected fresh optimism and added to the sense that the company could continue to ride major trends in technology for years to come.

But beyond the headlines and the dazzling percentage returns, how does Monolithic Power really stack up on valuation? By our count, the stock scores a 2 out of 6 on key undervaluation checks. That is something worth unpacking, especially for investors looking for both growth and value. Next, we will break down the valuation methods in play here and explore whether these traditional approaches truly give the full picture or if there is an even better way to gauge how fairly Monolithic Power is priced today.

Monolithic Power Systems scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Monolithic Power Systems Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future free cash flows and discounting them back to today's dollar value. This approach helps investors assess whether the current market price reflects the company's fundamental earning power.

For Monolithic Power Systems, the latest twelve months of Free Cash Flow (FCF) stand at $763 million. Analysts forecast annual growth in cash flow over the next five years, culminating in an estimated FCF of $1,245 million in 2029. After this period, cash flow projections are extrapolated further by analysts at Simply Wall St with expectations of steady increases through 2035. All figures are reported in US dollars.

Using the 2 Stage Free Cash Flow to Equity model, the resulting estimated intrinsic value per share is $368.76. Compared with the current market price, this implies the stock is a striking 190.4% above its fair value, suggesting significant overvaluation according to the DCF perspective.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Monolithic Power Systems.

Our Discounted Cash Flow (DCF) analysis suggests Monolithic Power Systems may be overvalued by 190.4%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Monolithic Power Systems Price vs Earnings

The Price-to-Earnings (PE) ratio is a preferred valuation tool for profitable companies like Monolithic Power Systems because it directly links a company's current share price with its bottom-line earnings, making it widely used for quick comparisons across the market.

What is considered a “fair” PE ratio is influenced by factors such as a company’s expected earnings growth, its risk profile, and broader industry trends. Generally, companies with faster growth and lower risk can justify a higher PE, while riskier or slower-growing businesses tend to command lower ratios.

Monolithic Power is currently trading at a 27.6x PE. This sits comfortably below both the semiconductor industry average of 36.1x and the peer average of 38.0x. This suggests the stock appears cheaper than similar companies by this simple metric. However, benchmarking alone can miss company-specific nuances.

That is where Simply Wall St’s “Fair Ratio” comes in. It sets a custom PE of 22.8x for Monolithic Power by factoring in not just industry and peers but also the company’s own earnings growth, profit margin, size, and risk profile. This proprietary metric offers a more personalized and accurate baseline for valuation.

Comparing Monolithic Power’s actual PE of 27.6x with its Fair Ratio of 22.8x, the company is running above what would be considered a reasonable valuation for its fundamentals. This suggests investors are paying a premium for the growth outlook and the company’s perceived strengths.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Monolithic Power Systems Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple story you build around a company, your own perspective on its prospects, combined with your assumptions about its future revenue, earnings, margins, and risks. By connecting the company’s story to a numbers-based forecast, Narratives link what you believe will happen to an easy-to-follow estimate of fair value, offering a more dynamic approach than traditional valuation ratios alone.

Narratives are easy to create and explore on the Simply Wall St platform, right within the Community page, where millions of investors use and share their thinking. Because Narratives update automatically whenever fresh news, results, or major events occur, they let you reassess your investment case in real-time. This makes it easier to decide whether Monolithic Power Systems is a buy or a sell by directly comparing your estimated fair value to today’s price.

For instance, some investors on Simply Wall St forecast Monolithic Power’s fair value as high as $979, highlighting strong momentum in AI and diversified growth. Others set it as low as $750, concerned about rising costs and slowing margins, so your Narrative helps put the numbers in context, based on your personal outlook.

Do you think there's more to the story for Monolithic Power Systems? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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